Total US Debt Soars To 101.5% Of GDP

There is nothing quite like a $70 billion debt auction settlement at the last day of a month to bring total US debt to a record $15.692 trillion, which happens to be just $600 billion shy of the $16.394 trillion debt ceiling. (and no, contrary to simple economic textbook lesson, this does not mean that the private sector just got another $70 billion in debt capacity courtesy of taxpayers, as explained here). And now that we know what Q1 GDP was at the end of Q1, or namely $15.462 trillion, it is simply math to divine that today alone total US/debt to GDP rose by 50 bps to a mindboggling 101.5%.

Below is a chart of two lines with different slopes. We leave it up to readers to figure out which line is GDP and which is total debt.

And as noted yesterday, now that the end of month auction has settled, one can easily see why the Treasury forecast of debt issuance through the end of September will only be correct if somehow the Treasury finds a way to print its own money without reliance on the Fed, or else every US taxpayer somehow hikes their tax payments by 15% voluntarily. Good luck on both counts.

Then again who cares about the short term. Here is what the total US debt/GDP will look like, frankly under either administration as both the presidential candidate and the incumbent have absolutely no idea how to fix an excess debt problem without issuing more debt (nor do they have any interest to).

And for those who still believe that insurmanoutable debt is suicide, we have good news, you are right, at least according to a new paper by Reinhart, Rogoff and Reinhart (via The American):

– We identify 26 episodes of public debt overhang–where debt to GDP ratios exceed 90% of GDP–since 1800. We find that in 23 of these 26 episodes, individual countries experienced lower growth than the average of other years. Across all 26 episodes, growth is lower by an average of 1.2%.

– If this effect sounds modest, consider that the average duration of debt overhang episodes was 23 years. In 11 of the 26 high debt overhang episodes, real interest rates were the same or lower than in other periods.

– Obviously, it is possible that new developments in technology and globalization will provide such a remarkable reservoir of growth that today’s record debt burdens will eventually prove quite manageable. On the other hand, the fact many countries are facing “quadruple debt overhang problems”—public, private, external, and pension–suggests the problem could in fact be worse than in the past, a question we do not tackle here.

– Nor have we paid attention here to the likely possibility of significant “hidden debts”, especially public sector, which Reinhart and Rogoff (2009) find to be a significant factor in many debt crises, and as documented in detail in the Reinhart (2010) chartbook. Another line of reasoning for dismissing concerns about public debt and growth is the view the causality mostly runs from growth to debt.

– Our analysis, based on these cases and the 23 others we identify, suggests that the long term risks of high debt are real.

That curve of debt vs time into 2084 shouldn't be linear! It fails to take into account compounding which is a biatch when it is working against you. All debt systems are exponential and so the curve should look linear only on a LOG scale.

The Debt clock predicts that, on this day in 2016, the gross debt to GDP ratio will be 127%, according to the current rates. It might even be worse than that if GDP takes a turn for the worse, housing doesn't pick up, the student loan crisis blossoms, war with Iran or some other country becomes a reality, etc., etc.

Why does nobody ever add in the $5.5 trillion of debt on the books of Fannie Mae and Freddie Mac in looking at the U.S. total debt picture. Uncle sam is on the hook for that as well and continues to fund the quarterly losses and preferred dividends to itself. With this debt the U.S. debt is really 21.4 trillion, or 135% of GDP, or well on the way to being Greece.

Hahahah......you people make me laugh. You think the US hitting 101% is bad, take a look at Japan's debt to GDP ratio but I have to warn you, prepare to piss yourself while your head explodes! Even with Japan's debt to GDP ratio WAY beyond our own, they carry on. Heck, they're even covered in nuclear waste yet life continues and on here, you people that are affraid of your own shadows, freak out at our debt/GDP raio hitting 101%. DOOM AND GLOOM.......PANIC, BUY SILVER, BUY GOLD........DOOM GLOOM!!!!!!!!!!!!!!!!!!! AHHHHHH! GRAB YOUR BUG OUT BAG, HEAD FOR THE HILLS........STOCK UP ON AMMO, WATER, FOOD AND TAMPONS?!?!#?!@@!# ? $@??!` THE END IS NEAR!!!!!!!!!!!!

I concur. And I'm pretty sure fukushima will be a net boon to their economy; their exports of circus freaks will ramp up in the coming years. Yes, you've convinced me - I'm going to the big city on Friday and sell blood plasma so I can buy Yen.

You have convinced me. The circumstances of the US and Japan are entirely the same as is the structuring of the debt. Our societies are also remarkably similar. Thank God you came here to shine your brilliance on the subject to clear everything up.

Nothing like MDB coming along reminding us of green shoots (sh*ts) all over the place, blah, blah, blah. I wish you shopped where I did. The faces of the sufferring are everywhere. And with each passing month, there are more and more.

Okay, MDB, would you please pass the blunt? Maybe that is what I am missing . . .

A debt is only a debt for as long as it is acknowledged and for as long as the creditors are happy to see the debt snowball gather size and momentum. Both of these conditions will at some point no longer apply. Foreigners and Americans be warned.

No NewThor, I think Paul is wrong about that. I've read that there are four things that are sure.

AS I PASS through my incarnations in every age and race,I make my proper prostrations to the Gods of the Market Place.Peering through reverent fingers I watch them flourish and fall,And the Gods of the Copybook Headings, I notice, outlast them all.

We were living in trees when they met us. They showed us each in turnThat Water would certainly wet us, as Fire would certainly burn:But we found them lacking in Uplift, Vision and Breadth of Mind,So we left them to teach the Gorillas while we followed the March of Mankind.

We moved as the Spirit listed. They never altered their pace,Being neither cloud nor wind-borne like the Gods of the Market Place,But they always caught up with our progress, and presently word would comeThat a tribe had been wiped off its icefield, or the lights had gone out in Rome.

With the Hopes that our World is built on they were utterly out of touch,They denied that the Moon was Stilton; they denied she was even Dutch;They denied that Wishes were Horses; they denied that a Pig had Wings;So we worshipped the Gods of the Market Who promised these beautiful things.

When the Cambrian measures were forming, They promised perpetual peace.They swore, if we gave them our weapons, that the wars of the tribes would cease.But when we disarmed They sold us and delivered us bound to our foe,And the Gods of the Copybook Headings said: "Stick to the Devil you know."

On the first Feminian Sandstones we were promised the Fuller Life(Which started by loving our neighbour and ended by loving his wife)Till our women had no more children and the men lost reason and faith,And the Gods of the Copybook Headings said: "The Wages of Sin is Death."

In the Carboniferous Epoch we were promised abundance for all, By robbing selected Peter to pay for collective Paul; But, though we had plenty of money, there was nothing our money could buy, And the Gods of the Copybook Headings said: "If you don't work you die."

Then the Gods of the Market tumbled, and their smooth-tongued wizards withdrewAnd the hearts of the meanest were humbled and began to believe it was trueThat All is not Gold that Glitters, and Two and Two make FourAnd the Gods of the Copybook Headings limped up to explain it once more.

As it will be in the future, it was at the birth of ManThere are only four things certain since Social Progress began. That the Dog returns to his Vomit and the Sow returns to her Mire, And the burnt Fool's bandaged finger goes wabbling back to the Fire;

And that after this is accomplished, and the brave new world beginsWhen all men are paid for existing and no man must pay for his sins, As surely as Water will wet us, as surely as Fire will burn, The Gods of the Copybook Headings with terror and slaughter return!

LOL! They estimated GDP at 15.5 Trillion? Must have Madoff running the numbers for them since there is no dip in GDP figure for the recession. Real GDP is probably around 7.7 to 8.5 Trillion once you remove federal, state and local gov't spending which does not count.

You clearly haven't been reading their emails thoroughly. I've made great gains in Broadvision and their older suggestion Mega Precious Metals, of course I do suggest doing a bit of research on your own.

Go check them out, some of their suggestions are even in Ron Paul's portfolio. They legitimately want to help people who fear that our government is out of control (which it is) and provide information on thriving during those times (buy gold/silver, stock up on food, etc.).

What's wrong with wanting to help people for free??? All you have to do is sign up to their mailing-list. Signup is at the bottom

Fuckin' sociopaths...central bankers...chattering about everything today [including ironically how no QE is coming...now] while all the while failing to remotely address...their fucking total and complete failure.

What will it take before at least one of these guys is reported to be "hanging from a lamp post" somewhere? Or how about...gasp...one of these clowns fired? Maybe an announcement that one of them really needs to spend more time with family and is retiring?

On Jan. 7th, 1973 the New York Times featured an interview with one of the nation's top financial forecasters, who urged investors to buy stocks without hesitation: "It's very rare that you can be as unqualifiedly bullish as you can now."

That forecaster's name was Alan Greenspan. Needless to say stocks didn't do so great in 1974, or until 1982 for that matter.

Sudden,... hey man don't post anymore links to the crazy bearded guy. Sh*t, I don't know if I can go to sleep tonight, ....really scary stuff, damn near as scary as "Bennie and the Jets" - even worse than Timma !!

"Order the appearance of any persons necessary to settle any claims completely and/or order the appearance of any non-parties, including but not limited to municipal and other governmental officials and lien holders, that may be essential for a total resolution of the claims;"

The banker men and their black hat lawyers filed this the DAY BEFORE this "May Day" event.

That gives us until mid-September, excluding any big events i.e. war, more qe. And somehow TPTB will find a way to drive down the PMs. I've started to expect the opposite will happen of what should, in every situation. Its bizarro world.

well the one thing that has been highly predictable is the debt holes since 2008 have been dug even deeper by the politicians and bankers and the central planners, sorry bwankers, have printed the crap out of our monopoly money

Facebook is great for government as it makes it very easy to track what people do, say, and think. Go ahead, plan your protest via Facebook- it makes it easier for them to figure out where to send the tear gas canisters which will at least save a few bucks.

as a Democrat said the amount of US debt is equal to the amount of power and status the US carries worldwide... so the US is the simply 'The Greatest' (debtor nation) according to these 'Einsteins of Economics' in Washington

Krugman is a fuckstick. How can any sane? person keep saying more and more debt is ok if we just use it to...(fill in the space as you see fit). WE, in North America, need production not consumption you cocksuckers or a French like revolution circa 1789 is gonna arrive with perhaps a subesequent reign ot terror somewhere to boot. Someone once said, "If you are in a hole, stop phucking digging"

we are doomed because there are no politically palatable solutions. real solutions would require balancing preserving the delta smelt against california central valley farm productivity. or balancing the need for diversity co-ordinators against the need for more engineering professors. or balancing the cost of the war on drugs against the benefits derived therefrom, for instance. all of these solutions would be vetoed by special interest groups.

let's see....STOP FUCKING SPENDING!!!! let idiots go bankrupt and purge the system! real honest business people would buy up the pieces of mismanaged corporations and hopefully run them for a profit! STOP distorting the market with government intervention!!!! let real market forces work!!!! Convict criminals instead of bailing them out!!!! Maybe some crazy f'ing ideas like that would work there poo...

Report from the field.... I've had three different clients in my office saying things are getting nuts in real estate in phoenix. Buyers are getting out bid, properties are be bought minutes after they hit the MLS , Reminicent of 2005/2006. One developer told me he busier now than in the boom. Did the bernak get his wish granted and we're gonna get price inflation in housing in the distressed markets?

I see a leveling off in 2011, due to the debt negotiaons naturally. As I recall, Guitner borrowed from the pensions to fund while the ceiling was raised. SInce there was not a spike after the deal was done, I suspect he hasnt paid back the pensions yet?

Boy, never say Leon Panetta can go fuck himself (being the worst murderer in this country). CBS News had a problem with it. Anyway, Leon Panetta can go fuck himself. I won't stand for mass murderers. But Satan welcomes him.

Just as a thought experiment- what if the Constitution prohibited the US Gov. from buying its own bonds? Or suppose that it were treason for any state to spend more than it received in revenues in a calendar year?

If all this were so, I predict that our standard of living would be considerably lower. What I mean to say is- our standard of living IS considerably lower, but we cannot comprehend it yet because all the minted currency floating on the horizons is obstructing our world view.